Russia’s Oil Exports Reach Maximum, Decline to Start in 2 Years — Official

Russia has almost reached its maximum level of production, the head of the Russian Union of Oil and Gas Producers, Yuri Shafranik, said on Tuesday, Nov. 9.
mosnews.com

Russia has almost reached its maximum level of production, the head of the Russian Union of Oil and Gas Producers, Yuri Shafranik, said on Tuesday, Nov. 9.

Speaking at a press conference Shafranik, quoted by Interfax, said: “We are currently producing almost the maximum amount of oil possible. Further growth can happen only if the [world] prices continue to rise, but [since that is unlikely to happen for much longer] Russia’s production and subsequent export will be automatically limited in two years’ time.”

The Russian official quoted experts from the International Energy Agency who predict that oil production in Russia will continue to grow for another two or three years, then the volumes of production will stabilize at a certain level, and then will begin to fall. “Only direct investment can change this situation,” said the head of the Oil and Gas Producers’ Union.

He did add that the IEA underestimates the fact that Russia has a number of unexplored oil deposits which can guarantee the growth of production for a while longer.

One of the factors that can positively influence the oil production, according to Shafranik, would be an increase in the number of small and medium-sized oil companies, which right now make up no more than 5 percent of the total. In order to increase this percentage the official suggested making changes in the legislature that would obligate oil processing plants to accept 30 percent of all oil from small and medium-sized companies only.

He also noted that it is necessary to establish state control over the effectiveness of the usage of oil deposits, because uncontrolled extraction can lead to a decline in production. Shafranik spoke of the necessity of investments in the geological exploration of new deposits. In his opinion 25 percent of these investments should be provided by the state itself. The oil official also said that the right to develop a deposit should be given to the same oil company that invested in its exploration.

http://www.mosnews.com/money/2004/11/09/oilproduction.shtml